Uncovered: Green's Empress of Arcadia

FOUR would-be bidders will be shackled by new Takeover Panel rules in the battle for supermarket chain Safeway. Asda, Sainsbury, Tesco and Morrisons face a lengthy investigation by the Competition Commission in the battle for the fourth-biggest grocer.

In a surprise move last week, only Philip Green, owner of the Bhs and Arcadia retail empire, was cleared by Trade Secretary Patricia Hewitt to make an offer. Green is now odds-on favourite. The Takeover Panel will insist that any rival offers must quote precise figures - not a range of share prices - and have specific conditions attached. No other offers will be allowed until Green's bid has been tabled.

HE is the Mr Big Mouth of retailing. She stays out of the spotlight. He bustles around London, doing deals and chivvying the lieutenants who run Britain's second-biggest retail clothing operation. She is rarely seen outside Monaco. He is emphatically hands-on. She is not.

But today, Financial Mail can reveal the pivotal role played by Tina Green in the business affairs of her husband, maverick entrepreneur Philip Green. Yes, Tina stays in the background. And yes, the empire embracing Bhs, Burton, Top Shop, Miss Selfridge and Dorothy Perkins is always seen as the business baby of the irascible Philip. But Tina - full name Cristina and his wife of 13 years - has played a key part in his business renaissance since he quit clothing group Amber Day in 1992, the last time he ran a stock market company.

And her discreet involvement in the complex web of ownership through which the Green retailing businesses are controlled makes perfect sense. Green jets between Monaco and London, but he pays UK tax. But as long as Tina is resident in Monaco, any wealth accumulated in her name remains - quite legally - beyond the reach of the Inland Revenue.

The Greens' marriage is pivotal in the tax-efficient ownership of the retail group he has assembled. Tina's key role in the history of her husband's retailing ventures is indisputable:

In 1997, Sears sold its Shoe Express chain to Philip Green. Within 24 hours, ownership had been transferred to Tina - just three months before the couple emigrated to Monaco in March 1998.

Since July 1999, Tina has been 53% owner of Owen Owen Holdings, parent of the department store operation Owen Owen that Green took over five years earlier.

In September 1999, Tina became a shareholder in the parent of Mark One, a discount fashion chain that Green had bought out of receivership in February 1996.

When Green had a tilt at Marks & Spencer at the beginning of 2000, an initial £23m-plus shareholding was built up in Tina's name.

Most dramatically, last September, Green took over Arcadia, parent of Top Shop, Burton and Dorothy Perkins. The bid was made using a company called Taveta Investments, majority-owned by a separate company, Taveta Limited, based in Jersey. The offer document said: 'Taveta Limited is wholly owned by Philip Green's Family who will make their investment in Taveta through Taveta Limited. The only director of Taveta Limited is Cristina Green.'

The Greens married at Westminster register office in 1990 when Philip was 38 and Tina, a divorcee, was 41. She already had some business experience.

Tina and her first husband had been directors of a clothes shop in fashionable Sloane Street, Knightsbridge. After her marriage to Green, Tina started a further clothing business - this one trading as Alma, apparently named after his mother.

There were parallels between the businesses. Both went under. Both were controlled by offshore companies. And in both cases, early company accounts said that Tina had no interest in the business. Subsequently, accounts said she had a stake.

But until spring 1998 when the Greens moved to Monte Carlo, Tina's business involvement was small-scale. Indeed, nine months after the couple's move, when Green spearheaded the £556m takeover in January 1999 of what remained of the Sears empire, Tina still played no public part.

Financial muscle came from the secretive Barclay brothers while Green and Scottish tycoon Tom Hunter provided the entrepreneurial zeal. Though the Sears business had cost only £556m, some £828m was quickly realised through asset sales. Debts were repaid and a colossal £235m in dividends was paid to a Jersey company controlled by the Barclay twins.

But at the end of 1999, Green's threat of a bid for M&S pushed Tina firmly into the big-league spotlight. He announced in December that he was looking at M&S and had taken on investment bank Donaldson Lufkin & Jenrette to help him. And the following month, after M&S made inquiries, Green said his wife had bought a stake in the company just ahead of his announcement. The purchase was quite legal. No clue was given about how she had raised the £23m or more to pay for the shares.

M&S pounced on the revelation, and in particular on a technical legal point about the status of a shareholder in a 'concert party' - a group of people contemplating a bid. In the melee that ensued, Green said he was dropping the whole idea of a bid for M&S.

Green was soon back. He considered a bid for Arcadia, but instead, in April 2000, chose to go for Bhs, paying £200m to take it off the hands of the struggling Storehouse group.

It was a sweet deal for Green. Bhs was in a dreadful state. He shook up the business; in particular, he squeezed much lower prices out of suppliers. In the year to March 2002, Bhs showed an operating profit of £100m.

That remarkable turnround gave Green the platform, and won him sufficient respect from financial backers, to allow him to pay £850m for Arcadia six months ago.

Green the City outsider, the man who had left Amber Day ten years earlier, was now in charge of Britain's second biggest clothing retail group.

There had been hiccups on the way. After Amber Day, Green started his comeback by buying 54 discount stores. The chain was relaunched by Green and his long-standing ally, Stephen Kay of video company Intervision. The business traded under the name Xception Stores, but only ever made losses and went under in January 1997 owing £13m. Much of it was owed to Green. He made up the shortfall.

Nevertheless, Green has since had sufficient success to re-establish himself, and at the beginning of this year he felt able to announce that he was interested in Safeway.

That he has done well is clear. What is harder to divine is exactly who owns the companies Green runs. Three of the four shareholders in Bhs are based in offshore tax havens - the British Virgin Islands and Jersey. The fourth is Hunter's vehicle, West Coast Capital

Tina's role in the bid for Arcadia was explicit: she was declared as the sole director of the 'Philip Green Family' company through which the bid was made. But any part she has played in the control of Bhs is unclear. Official records give only clues. Bhs accounts for the first year under Green's control say: 'P. Green is the ultimate controlling party of Bhs Group Ltd.'

The following year there was a subtle, but striking change: 'P. Green and his immediate family are the ultimate controlling party of Bhs Ltd.' Given that the Greens' children, Chloe and Brandon, are still young, it is hard to see who besides Philip and Tina exercise that control.

For the Greens, having Tina living full-time in Monaco gives the potential for huge tax savings. Company documents show that Green moved his address from north London to Monaco on March 31, 1998 - a crucial few days before the start of the tax year. Tina has lived there ever since, with Green commuting between London and the principality. Tina visits London more rarely, though she was in Britain last week. Green has to spend time in Britain to look after his businesses, and pays UK tax. Anyone who spends an average of 90 days a year in Britain is liable for UK tax on any income or capital gains.

But he has no liability for his wife's income. And as long as Tina remains in Monaco, any income she receives, if it comes via an offshore company,

is free of UK tax. Of course, the Greens' UK companies pay corporation tax. But dividends paid to an offshore company escape income tax. Bhs last year paid dividends of £175m, of which £156.5m went to the Greens.

A City tax expert said: 'If a company is not controlled by a UK resident, the dividends are paid tax-free. A non-resident-controlled Jersey company, such as the one that controls Bhs, can receive tax-free dividends. It's as simple as that.

'I don't see how the Inland Revenue could challenge it. It is effectively a smart combination of non-residence and separate assessment. And you are home and dry on capital gains tax once you have been non-resident for five years.'

Next week marks the fifth anniversary of the Greens' official move to Monaco.

There is no suggestion that anything about the Greens' arrangements is improper or illegal. Green told Financial Mail: 'The bottom line is my family is non-resident.' He went on: 'We are significant investors in the UK.'

But it is striking that over the past six years, Tina and the 'Philip Green Family' have played so significant a role in his business life. 'My wife doesn't speak to the Press,' he said.

In many ways, Green is very blokeish. He loves football and flash cars - and once treated a Financial Mail reporter to a trip round Monaco in his Ferrari. He is usually puffing on a Marlboro Light, though he had a heart attack in the Nineties. He swears like a trooper - and that's when he's simply chatting with friends. When upset, his language becomes really spectacular.

But for such a man's man, Green has been happy to have women play an important role in his life. The first was his mother, Alma. From the mid-Seventies, she had an official role in four clothing companies where Green was either a director or company secretary. These included the Joan Collins Jean company. Alma owned half of one of his early companies, Buzzville.

More recently, a key Green ally has been glamorous Robin Saunders, the WestLB banker who helped finance the Bhs purchase and who was rewarded with a stake in the company equivalent to just over 0.5%.

Like Green, Saunders has a taste for flash parties. Last June, in a joint celebration of her 40th birthday and the 10th anniversary of her marriage to Matthew Roeser, American-born Saunders held a spectacular bash for 180 people in Florence. The extravagance could scarcely match the £5m that the Greens are thought to have spent on his 50th birthday party in Cyprus three months earlier where guests were required to wear togas. But still, the cost of Saunders' gathering was estimated at about £400,000.

More important, Saunders - and the billions WestLB can mobilise - have become crucial to his ventures. WestLB has agreed to finance a bid for Safeway if Green presses ahead.

On a more modest scale, Green's business acumen has brought him a further female admirer - Aida Hersham, ex-wife of Mayfair estate agent Gary Hersham.

For more than three years, Aida and Green have been friends. And while Green was looking at M&S, she built a significant personal holding in the retailer, then at the nadir of its fortunes.

She first appeared as an M&S shareholder nine days after Green announced that he was looking at the company. Over the following two months, she carried out a number of deals in M&S, and at one point her stake was worth about £200,000. According to M&S records, Aida Hersham had never held M&S shares before.

She has dabbled in business herself through companies dealing in perfume and clothes. But Aida found herself in gossip columns in the Nineties after becoming involved in a strange romantic tangle.

Following the scandal of the Guinness takeover of Distillers in 1986, one of the miscreants to be jailed was stockbroker Tony Parnes. Gary Hersham and Parnes were cousins.

After Parnes, known as 'The Animal' during his broking days, was released from Ford Open Prison, his marriage failed and he turned to Aida Hersham. Parnes moved into the smart house in St John's Wood, north-west London, that Aida had occupied since setting up home there in 1983 with Gary and where the Hershams raised their two children, Gabriella and Alexander.

Aida's relationship with Parnes broke up in the late-Nineties. And though Aida - a strikingly beautiful and elegant woman now aged 42 - still lives in St John's Wood, last year she bought a pair of flats in Belgravia for £4.1m.

The flats are being knocked into one and renovated. Aida has taken out a loan provided by Bank Leumi - the bank that has helped Green to fund some of his past business ventures.

Bank Leumi was lending to Green as long ago as 1985 with his company Lucasport. During Green's years out of the spotlight between Amber Day and Bhs, the bank served his companies, Xception Stores and Northworld. And where does Northworld fit into the picture? It was the company used buy Mark One - and Tina is a 14% shareholder.

Tina's involvement - in Mark One, in Arcadia, in other Philip Green businesses - is never publicly remarked on. She stays quietly in Monaco. She leaves her husband to do the talking. He remains Mr Big Mouth. But she remains pivotal.